SaaS Sales Strategy: Upstream vs. Downstream Approaches

When it comes to selling SaaS products, choosing the right sales strategy is critical. Two primary approaches dominate the discussion: selling upstream and selling downstream. Understanding the nuances of these strategies can help you determine the best path for your product and target market. This article will explore both approaches, weighing their advantages and challenges, and provide insights into when each strategy is most appropriate.

Upstream Sales Strategy

Definition and Approach: The upstream sales strategy involves initially engaging with lower-level employees who will be the end-users of the SaaS product. The goal is to demonstrate the product’s value and utility to these employees, who then advocate for the product to upper-level management for final approval.

Advantages:

• User-Centric Validation: Lower-level employees are often the primary users of SaaS products. Engaging them first allows you to tailor your demonstrations and trials to their specific needs and pain points, making the product’s value immediately apparent.

• Grassroots Advocacy: Satisfied end-users can become strong internal advocates. Their positive experiences and endorsements can carry significant weight when upper management considers the product for broader adoption.

• Incremental Adoption: Starting with smaller teams or departments allows for gradual integration of the product. This minimizes disruption and provides real-world case studies within the organization, making the case for broader adoption stronger.

Challenges:

• Longer Sales Cycle: Convincing lower-level employees and waiting for their advocacy to reach upper management can lengthen the sales cycle. This approach requires patience and sustained engagement with multiple stakeholders.

• Limited Decision-Making Power: Lower-level employees may face challenges in influencing decision-makers, especially in hierarchical organizations where upper management holds significant control over purchasing decisions.

• Resource-Intensive: Engaging with numerous end-users requires substantial time and resources. Each demonstration and trial must be customized to address specific user needs, which can be demanding.

Best Practices:

• Trial, Product Evaluations, POC’s: Offer trials or POC’s of the product to select teams to show and validate the product and its value proposition, with real life examples. This should generate initial excitement, however ensure the DM’s are present during any trial process to help with the decisions, and procurement.

• Collecting Testimonials: Use positive feedback and testimonials from end-users to build a case for wider adoption.

Downstream Sales Strategy

Definition and Approach: The downstream sales strategy targets upper-level management, such as directors or C-level executives, from the outset. The goal is to present the product’s strategic value and ROI to these decision-makers, who can then mandate its adoption across the organization.

Advantages:

• Shorter Sales Cycle: Engaging with decision-makers directly can significantly shorten the sales cycle. Once convinced, upper management can quickly approve and implement the product across the organization.

• Top-Down Mandates: Decisions made by upper management often carry more weight and can lead to faster, more widespread adoption. When executives see the strategic value, they are more likely to push the product downstream.

• Strategic Alignment: Upper-level management is typically focused on strategic goals and ROI. Presenting the product’s potential to enhance productivity, reduce costs, or drive revenue growth can resonate more with this audience.

Challenges:

• Higher Stakes: Presentations to upper management must be flawless and compelling, highlighting clear, strategic benefits. Failing to do so can result in swift rejection, with little opportunity for second chances.

• Resistance from End-Users: Mandates from above can sometimes lead to resistance from lower-level employees who were not involved in the decision-making process. This can hinder effective implementation and utilization of the product.

• Complex Procurement Processes: High-level engagements often involve rigorous procurement processes and due diligence, which can be complex and time-consuming.

Best Practices:

• ROI Focus: Highlight the return on investment (ROI) and strategic benefits the product can bring to the organization.

• Tailored Presentations: Customize presentations to address the specific pain points and goals of the executive audience.

• Case Studies and Metrics: Use data-driven case studies to demonstrate how similar organizations have benefited from the product.

Challenges in Getting the Attention of Higher-Level Executives

Difficulty in Gaining Access: Engaging higher-level executives directly can be challenging due to their busy schedules and the gatekeepers who manage their time. Executives often receive numerous pitches and proposals, making it difficult for your message to stand out. Research indicates that getting access to C-level executives requires not only a strong value proposition but also effective networking and timing​ (Growth Hackers)​.

High Expectations: Executives expect presentations to be polished and data-driven, with a clear demonstration of strategic value and ROI. Any misstep or lack of preparation can lead to immediate dismissal of the proposal. Therefore, sales teams need to invest significant time in preparing tailored, high-quality presentations​ (HubSpot Blog)​.

Decision-Making Complexity: Upper-level management typically involves a more complex decision-making process, often requiring alignment with various departments and stakeholders. This complexity can slow down the sales process, as executives need to ensure that the product fits into the broader organizational strategy and meets compliance and budgetary requirements​ (Halsell)​.

Risk Aversion: Executives are risk-averse and require substantial evidence of the product’s reliability and potential impact before committing. This means that sales teams must provide comprehensive case studies, pilot results, and references from reputable sources to build trust and credibility​ (Growth Hackers)​.

Which Strategy to Choose?

Strategic Products vs. Operational Products:

• Strategic Products: If your SaaS product addresses high-level strategic needs, such as enterprise resource planning (ERP) systems or customer relationship management (CRM) tools, a downstream approach might be more effective. These products require significant investment and alignment with long-term business goals, which are usually overseen by top executives.

• Operational Products: Products that improve day-to-day operations, such as project management tools or team collaboration software, may benefit more from an upstream approach. These tools need to be embraced by the employees who will use them daily, and their feedback can be crucial for gaining management approval.

Examples:

• Strategic Product Example: A comprehensive data analytics platform that provides insights for business strategy might be best sold downstream. Convincing the C-suite of its potential to drive growth and improve decision-making is key.

• Operational Product Example: A task management app that enhances team productivity is likely to succeed with an upstream approach. Demonstrating its efficiency to team leaders and getting their buy-in can pave the way for broader adoption.

Product Considerations

Strategic Products:

• Enterprise Resource Planning (ERP) Systems: SAP S/4HANA, Oracle ERP Cloud, Microsoft Dynamics 365. These systems integrate various business processes, providing top-level management with real-time data for strategic decisions.

• Customer Relationship Management (CRM) Platforms: Salesforce, HubSpot CRM, Zoho CRM. CRM platforms manage customer interactions, offering strategic insights into sales pipelines and marketing effectiveness.

• Advanced Analytics and Business Intelligence Tools: Tableau, Power BI, Qlik Sense. These tools analyze large datasets to provide actionable insights, supporting data-driven decision-making.

• Supply Chain Management (SCM) Software: SAP SCM, Oracle SCM Cloud, Kinaxis. SCM software helps in planning, executing, and controlling supply chain activities, aligning with strategic business goals.

• Human Capital Management (HCM) Systems: Workday, SAP SuccessFactors, Oracle HCM Cloud. These systems manage HR processes, providing strategic insights into workforce planning.

Operational Products:

• Project Management Tools: Asana, Trello, Jira. These tools help teams plan, track, and manage projects, improving workflow and collaboration.

• Communication Platforms: Slack, Microsoft Teams, Zoom. Communication tools facilitate real-time messaging and file sharing, streamlining team communication.

• Task Automation Software: Zapier, Automate.io, IFTTT. These tools automate repetitive tasks, saving time and reducing errors.

• Time Tracking and Attendance Software: Toggl, Clockify, TSheets. These applications help log work hours and manage time-off requests.

• Help Desk and Customer Support Software: Zendesk, Freshdesk, ServiceNow. These platforms manage customer support tickets and live chats.

• Collaboration Tools: Google Workspace (formerly G Suite), Dropbox Paper, Notion. Collaboration tools support document creation and sharing among team members.

Industry Insights

Industry research supports the notion that both upstream and downstream strategies have their place, depending on the product and target market. For instance, upstream marketing can create long-term customer loyalty by building strong user advocacy, while downstream marketing can drive immediate sales and market penetration through targeted campaigns and promotions​ (HubSpot Blog)​​ (Halsell)​​ (Growth Hackers)​.

Combining both strategies might offer the best results. Start with upstream efforts to build grassroots support and gather valuable user feedback, then leverage downstream tactics to secure executive buy-in and ensure strategic alignment. This integrated approach can create a seamless customer journey from initial awareness to final purchase and beyond, enhancing both customer satisfaction and business success.

Conclusion

Understanding whether your SaaS product is strategic or operational in nature can guide you in selecting the most effective sales strategy. By targeting the right audience—whether it’s engaging lower-level employees to build grassroots support or convincing upper-level management of the product’s strategic value—you can increase the likelihood of successful adoption and maximize the impact of your SaaS product. Combining both upstream and downstream strategies can provide a comprehensive approach that addresses all levels of the organization, leading to increased revenue, customer loyalty, and overall success.